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Employee Benefits and a Changing Workforce

It’s been a year of conversation around benefits in Iowa as the legislature took up collective bargaining. It’s no doubt an emotional issue, no matter which side of the argument you fall. Sometime during the course of debate at the statehouse, my mother and I got in a pretty heated discussion about the issue, ultimately ending with me saying something along the lines of, “Well, nobody in my generation stays at one job long enough to be fully vested, anyway.”

I have no real data to back that up, but looking at my resume alone, and the fact that I currently have, in my name, an IPERS, FERS, 401(k) and 403(b) retirement account, it doesn’t feel like I’m too far off with the statement. With remote and freelance workers on the rise, it is apparent that how we do benefits needs to change with a workforce that that is continually on the move.

Portable Retirement Benefits Planning Grant Program

This idea is not all that new, but recently gained some traction with the Department of Labor (DOL). DOL made funds available through a “Portable Retirement Benefits Planning Grant Program” in July of 2016. In a press release, the DOL stated that in order to “adapt to the changing nature of America’s workplace,” the availability of approximately $100,000 in funding would be made available through the grant program for employees that wouldn’t traditionally have access to retirement benefits.

Another press release, from the office of Senator Warner (D-VA), applauded the grant program, stating that “funding will be awarded to nonprofit and other organizations to identify the existing challenges in the current retirement system for workers—particularly women, and those in lower-income occupations—and to expand and develop new portable retirement savings models.”

The DOL also stated “the program seeks to assist those workers who have traditionally lacked access to an employer-provided retirement benefits program (including independent contractors) or are otherwise less likely to have income from pensions or assets. Changing work arrangements in the high- and low-tech sectors place a greater importance on need for millions of workers – whether they are employees or independent contractors – to be able to take benefits from job to job to ensure greater retirement security.” According to DOL, one out of three workers today does not have access to a retirement savings plan, including half of workers at firms with fewer than 50 employees and more than three-quarters of part-time workers.

States Look to Address the Issue

Under President Obama, the Labor Department issued a rule that was supposed to make it easier for individuals without access to a retirement plan through an employer to create an account with the state. Under the rule, states would not be subject to the Employee Retirement Income Security Act of 1974 (ERISA), which is the federal piece of legislation that governs pensions and retirement funds for the private sector. ERISA was created to ensure retirement plans are “established and maintained in a fair and financially sound manner.” Herein lies the biggest debate of a state run portable retirement plan — can the state effectively enroll and manage plans for individuals? Other concerns include the idea that state-run plans could encourage some employers to discontinue offering their own plans (especially small business owners), and that without states being subject to ERISA, employee retirement savings might not be as well protected.

The debate might be a moot point, as the current administration is not a fan of the recently issued DOL rule. (A resolution to repeal the rule has passed both the House and Senate.) Many states including, California, Oregon, Illinois, Maryland and Connecticut are currently working on state-backed retirement plans—the repeal of the rule would make it increasingly difficult to establish state-run retirement plans.

Policies Need to Evolve with the Workforce

As how we work continues to change, the policies (local, state and federal) need to keep up. Government is not known for moving quickly, but the voices within the tech community have the opportunity to advocate for policies that protect and nurture this community.

This is a call to action to have the important discussions that impact the startup, tech, and remote worker world. These issues seem like they may not impact us for a long time, but they need to be discussed among stakeholders and taken to policymakers now. Without the input from the community, the issues remain largely the same—and life after retirement is not something to leave to chance.

Susan Gentz is the deputy executive director for the Center for Digital Education and a contributing commentary writer for Clay & Milk.